Denver rents are going up, but if the city lands Amazon’s second headquarters, the impact on rents will be greater here than in any of the other 19 cities competing for HQ2, according to a report released Thursday by real estate market researcher Zillow.
Zillow estimates that Denver’s median rents, currently around $2,047 a month, will rise 3.6 percent next year even without Amazon and its 50,000 jobs for a future campus. But should the city be picked, rents will increase an additional 2.3 percent, said Zillow. That translates to about an extra $1,452 a year in rent payments.
“While the prospect of 50,000 new jobs is no trivial matter for any city, the home to Amazon’s second headquarters likely won’t experience the kind of dramatic boost in rents Amazon helped fuel in Seattle,” Zillow senior economist Aaron Terrazas said in a statement. “Nashville and Denver are the only two metros that could see a greater boost to rents due to Amazon than Seattle has seen.”
Amazon HQ2 would have a greater impact on rents in Nashville, where median monthly rents are currently $1,497. But Nashville hasn’t seen the growth of Denver in recent years. Then again, Terrazas added, Zillow’s data is based on numbers through 2016. As the area’s population has outpaced housing supply, it has caused Denver’s housing market to be “a very tightly stretched rubber band, meaning a small increase meant a big increase in rent,” he said in an email.
“It’s likely that limited supply caused Denver’s rapidly rising rents, but in the past few years, however, more inventory has come online, slowing the rent appreciation. That said, the potential influx of a large company like Amazon moving to Denver can strain inventory and add additional rise in rents,” he said.
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The cities least impacted by welcoming Amazon are Indianapolis, Chicago and Toronto, according to Zillow. In fact, Indianapolis would see no impact because the city has plenty of homes and is one of the most affordable housing markets in the country. Newcomers would probably just buy a house instead of rent. Current rents in Indianapolis are $1,208 a month and are expected to go down $2 if Amazon picks the city.
Amazon has said that wherever it chooses to build a second headquarters, the company plans to invest $5 billion in construction and hire 50,000 workers with average annual salaries of $100,000.
In January, Amazon named Colorado’s proposal one of 20 finalists. The company has since visited most of the cities but has only said it would pick a city this year.
Sam Bailey, the vice president of economic development for the Metro Denver Economic Development Corp. and the person handling the state’s bid, said he has not spoken with Amazon since updating the region’s proposal in early March. But, he added, he believes the company is done visiting the finalists.
“We could get a call tomorrow or a call in two months,” Bailey said. “They’ve played their cards pretty close and are running this on their own terms.”
